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On this board. I’ve held boohoo group for a while since retiring and due to things coming off the boil I’ve stumbled across this board sort of hoping for a few considered thoughts but claims on here that a handful of Debenhams brands will be the main money maker here nearly had me off the chair.
A quick scan of the statements from the Arcadia and Debenhams deals had online revenues of £170m and £100m respectively. The Arcadia brands, with stores, were only a total of £430m revenue. So with the current stable of prime brands growing at 20% a year does anyone want to try and tell me you’re going to get growth out of some “has been” brands that would make Apple look sluggish. You might want to take yourself for a rather long walk.
Again Debenhams, with stores and all revenues streams, clocked in £1.5billion of revenue before it turned belly up. But hey maybe the team at boohoo will have all of these brands at 400% growth year on year for the next 5 years?
Me thinks not but then again, stranger things have happened. No doubt there is promise and something to be gained but bigger than the current business? It won’t be in any near future. Someone mentioned beauty and that muck really is gold.
Yeah right.....you clearly don't understand anything about fashion and where the big spenders are! The hight street has been wiped out....so where are the people like me who spend £5000 on new clothes every year going to shop at....? There is a huge market for women over 18-25, and BooHoo would be blind not to take advantage of it. I don't care about the brand...I want beautiful, interesting, well fitting and good quality clothes, exactly as I am!
You are talking as if BooHoo are going to sell the same crap as Arcadia and co did, for the past years! The fashion, silly! It changes all the time. Get the right people to design the right kind of clothes, sell them on Debenhams platform and make a fortune!
If all it took was a bit of spit and polish to turn Debenhams into an online powerhouse, it would of not gone belly up in the first place, and it certainly would not have sold for £55 million.
£50 notes dont lay in the street for very long. There's absolutely no chance, zero, that the market just stood back and watched Boohoo just pick an asset up on the cheap that could easily be turned into a billion pound business. If this isn't obvious to you, you shouldn't be in the market.
How can anyone look at the growth and margins of boohoo's core business and think the correct course of action would be anything other than having the majority of current investment go into further expanding them, especially given their overall market share has plenty of headroom to grow into.
Oh and Kallu, I don't know if you've noticed, but almost everything is in a bubble right now. The idea that with all the pent up savings sloshing around, that middle class people are shopping in Primark is utter drivel.
Far from being squeezed, household savings are through the roof. It's almost like you don't understand the very basics of what is going on right now economically.
@jjo, I agree. You're getting insane growth from boohoo and PLT. Get all the cash you can into making those the success they can be globally
Reasons
- that growth is driving the multiple = makes your shares worth more
- they are higher margin = JL said newer brands will be lower so why put cash to a lower return
- marketplace was chosen for Debs as it doesn't divert cash
- none of the debs brands are getting their own websites so there is no big plan to "push" them. Why advertise matary and others one by one when you can just advertise Debenhams in one big go (which is what has happened so far)
- the stock is valued (or was! ha) on a huge forward multiple for the growth in PLT and Boohoo. If they slip even for a second your shares will get a lot cheaper. This is the "hard to get your head around part" you can't just earn a £1 from anywhere it is "how you earn the £1". If boohoo and plt went backward it wouldn't matter what growth you got from debenhams your shares will start with a £1.xx number (this is why you need to understand what you are buying. If you're buying a bet on debenhams then that's really not it through this share instrument)
great if the debs brands end up adding something. No one is against that but thinking they are the "main money makers" is delusional
The marketplace could be value adding as it can drive a multiple but again that "how you make the £1. Not just making a £1"
Jjoo. No disrespect intended but you said "it would of not gone belly up in the first place, and it certainly would not have sold for £55 million." The increasingly common use of "would of" personally irritates but it also makes the user sound thick and uneducated which by reading your posts I'm sure you're not. What really puzzles me though is that you get it right and wrong in the same sentence. Lol. Shame you can't edit on LSE. I repeat no offence intended.
I don't get offended, so don't worry about it. I do the same on Twitter and get pulled on it.
These forums and the likes of Twitter are just notepads for brain dumps to me. Somewhere to thrown ideas about and see what comes back. If I was to edit and filter and formalise my thoughts, I wouldn't do it on here.
I know this is annoying to people who have a sort of detailed oreintated and organised personality shall we say, but It's really none of my business what you think of me.
People unable to understand concepts that require a bit of lateral thinking often seem a bit thick to me, which is often the same people correcting me on my grammar. It's funny how that works.
Debs failed for a few reasons, its a long tale and well known in the trade. Firstly sales have always been pretty strong, 2011 saw record profit of 160 mill and t/o continued to rise in fact i think 2017/18 saw higher t/o than its record profityear, however this was off the back of store expansion which involved the old story of signing up to onerous leases, this all coincided with increased mobile connectivity and explosive increases in people shopping off their phones. 2017 sales and stores were at record levels, however so was debt, in order to maintain sales Debs started the slippery slope of discounting and promo's, margins took a hit and this drug of discounting was at the expense of profit,. margins dipped but rents and rates dramatically increased and lenders got jittery, our supplier payment terms went from 30 days to 120 in the space of 6 months, we called it a day as risk v margin was just not worth it, over the next 20 years they would have had £4.3 billion of lease obligations. Debs collapsed not because of poor ranges or loyalty but because of bad decisions by Directors which led to massive debt and this was off the back of asset stripping before re floating. At its height Debs T/O was nearly 3 billion, PLT t/o is what circa 500m. Read the YouGov report i posted on here re BH Group and the loyalty that Debs has v younger Brands. If Debs/Arcadia can't in time exceed PLT then what the hell did they buy it for, I've also posted the DNA of BH Group, Debs, Arcadia, my belief is that JL, Kamani, AR, MH, KC saw this demographic as clear as day. Just my musings take em or leave em, end of day holders just want share to rise, yes even the plumbers who stuck it all on black, doesn't matter how provided it does.
Rag, record sales mean nothing without looking at the cost of those sales.
The language you are using implies that Debenhams history can inform you its of its future. It can't. The only thing that Debenhams now has in common with Debenhams a few years ago is the name. Debenhams history is irrelevant other than its brand equity. As a business it does not resemble anything like what it was 4 years ago and so the sales figures from 4 years ago are of no interest.
They have bought Debenhams because it provides brand equity that boohoo can use to enter the beauty market, and hopefully expand its demographic reach although it remains to be seen how many customers they can hang onto online only.
What Debenhams and a marketplace provide should it be successful is for boohoo to apply its data strengths to both new products and new demographics. It's the first stepping stone, a vehicle for boohoo to explore optionality and opportunity in the future into different products and broader demographic ranges. There is almost zero chance that high sums of investment are going to go into Debenhams over the next couple of years given more profitable capital allocation alternatives available to them.
Problem is rag I think your too close to this side of the business, you need to zoom out a little.
I do agree with rag re the size of the prize and brand loyalty of debenhams but that's not to say I agree that all of a sudden a few old dusty brands will be the money earner
The point of debenhams for boohoo (no order on these btw) is 1) beauty 2) market place and 3) a great shop window for all brands (to cover all demographics - which rag pointed out and I believe is correct)
Debenhams is a great for boohoo as you can get customers x-buying ie buy a jumper and add in make up. The cost to boohoo is the same as just sending the jumper but now there is a £50 bottle of smelly in there. That synergy gain is insane
The debenhams fashion brands might do ok but they won't out-do PLT and boo etc
But just FYI rag - the debs t/o number you quote is gross of market place (so you have to pull that out) and also includes international (which isn't around yet) so the total Debs revenue number is £2billion but again that got online in, selling third brands (wrangler etc - which was a lot bigger under debs), income from concession and also beauty
So it's not quite as you'ev made out that the debs brands are racing to £3billion as they haven't ever been there
Also re PLT. It was £500m a few years back. The group then grew by 40% (so assume PLT did it's bit) then that makes it £700m and since then the last update put the group at the same growth again (so assume PLT did it's bit) put it on a run-rate over £1billion
Always good to understand what you own. Just off on PLT by the 100% or so
They now have a vehicle with brand equity to a broad demographic. A place for future beauty and fashion acquisitions to sit, and another outlet where all their brands can be marketed and pushed.
In addition to having 20 different brand specific websites, it's a bet on a shopping centre of the future, a place with a huge product range shoppers can browse. A sort of fashion and beauty Online department store that's well recognised and regarded as a fashion and beauty brand.
But this vision is not a 3 year vision, it's further out into the future.. For boohoo to slow down investment into boohoo and plt etc in favour of adding more investment into debs would be insane. The bigger they get, the harder they are to catch, so letting your foot off the accelerator is a really risky thing to do. The capex rightly will keep flowing into boohoo distribution which benefits all its brands, but the focus should squarely be cementing boo and plt etc as big players in the sector.
It would be great in 10 years if Debenhams is seen as THE place online for fashion and beauty, and boohoo owned many strong beauty and fashion brands, but we are some way off yet. The vision will be much bigger than peddling 2nd rate clothing brands though. This is why you invite other brands to come in, because it allows you to offer a broad selection of fashion and beauty products right off the bat with little investment, as to try keep the Debenhams brand equity alive whilst they work on the grand vision with the added benefit of applying your data anylitics to inform future acquisitions etc. If you don't do that Debenhams brand equity will go to the wall.
Jjoo , indeed profit is sanity, did you read the YouGov link i sent about loyalty ??? in the Debs Demo. Debs was bought for many things and yes beauty being one for the fundamental reasons, dismiss the clothing, not sure management are tho as we have booked 10's of thousands across the Debs Brands, they will of course be looking at buying history to gauge demand, tbh they are easy to dismiss but given that you said your not sure exactly what the actual Brands are then yes deffo perhaps i am a bit closer and therefore have a decent insight. I assume your invested, so at end of day all that matters is that share rises, if it rises due to Beauty great, if it rises due to PLT great, if it rises because Debs loyal customers are buying into the myriad of Brands that they know and trust then great, remember Debs was not dead and buried sitting under ground only 3 years ago it was doing 3 billion, all inc Burtons and DP's were trading, issue were the horrendous costs that had built up, look at the History of the debt pile on both Debs and Burtons, PG 1.2 billion divvy !!! and oblivious to online investment, chuck in a bit of Covid to drill in the final nail a few years early, this is what finished them both not the offer.
Won't be that easy to balance either. Booho will be massive in 10 years if they pull it off, but balancing the investment required as to stay ahead of other people trying the same will be tough. I still can't see them spending massive amounts on debs in the next 2 or 3 years though
@jjo might be worth you copying my point re the debs accounting and also the PLT figures for rag so he can see them
His "closer" view is off by some rather large figures
Thanks
Can you post the yougov link again rag. If Debs surprises on the upside it would be great, but I think investors are correctly discounting it until we see how it progresses.
Danl90 has said your right ref brand loyalty but some of the debs figures are wrong -
Danl90
RE: There’s some nonsenseToday 12:01
I do agree with rag re the size of the prize and brand loyalty of debenhams but that's not to say I agree that all of a sudden a few old dusty brands will be the money earner
The point of debenhams for boohoo (no order on these btw) is 1) beauty 2) market place and 3) a great shop window for all brands (to cover all demographics - which rag pointed out and I believe is correct)
Debenhams is a great for boohoo as you can get customers x-buying ie buy a jumper and add in make up. The cost to boohoo is the same as just sending the jumper but now there is a £50 bottle of smelly in there. That synergy gain is insane
The debenhams fashion brands might do ok but they won't out-do PLT and boo etc
But just FYI rag - the debs t/o number you quote is gross of market place (so you have to pull that out) and also includes international (which isn't around yet) so the total Debs revenue number is £2billion but again that got online in, selling third brands (wrangler etc - which was a lot bigger under debs), income from concession and also beauty
So it's not quite as you'ev made out that the debs brands are racing to £3billion as they haven't ever been there
Also re PLT. It was £500m a few years back. The group then grew by 40% (so assume PLT did it's bit) then that makes it £700m and since then the last update put the group at the same growth again (so assume PLT did it's bit) put it on a run-rate over £1billion
Always good to understand what you own. Just off on PLT by the 100% or so
Jjo they are investing 500 million, as i keep saying what the hell is the point of buying something and shouting out about it telling everyone how good it's going to be and then not backing it, this is BH Group now not Boo Hoo, i can categorically tell you that they are backing these Debs Brands so we will just have to agree to disagree but the girl who is 23 now will be 33 poss with a kid in 10 years and she will not be buying from PLT, the Demographic and it's spread is so critical to all of this as it makes the potential is huge.
Jjo LoL, Lol don't go there with the Trolls bidding if you haven't gleaned the way he operates then i think you should perhaps look back, you won't have to go far see @Pmoran, Desperate (Dan) is indeed desperate , lol, for someone to act for him, looks like you have taken the bait, you won't get any response from me as i don't feed Trolls, i just get ginger, sorry i mean green, coming up so he needs a proxy, i steer well clear if i was you.
Click on my user name, all my posts will come up, YouGov link not that far makes interesting reading, ttfn.
Nobody is saying they won't back it. What is being said is that the 500 million is over 5 years and will likely be used on driving efficiency by further investment into distribution. This adds a lot of value and efficiency to debs so it is an investment into debs obviously, but more to the point it allows the core brands ( the ones creating the 500 million that will be spent) to further expand and cement their competitive advantage.
You're talking about investment specifically into debs brands. I'm sure these brands are ok, but they are not going to be doing boohoo or plt numbers, and they will also only receive a small amount of the 500 million being spent.
I've already explained why it's being bought, and it's not likely it was for the debs brands. Isn't it obvious that boo and plt etc will be the main focus? How much money is a 30% increase in boohoo's core business worth, surely you can see why that's a priority.This is basic capital allocation.
All I'm saying is the brands you've mentioned have very little equity in my decision to invest in boohoo. They are a tiny proportion of the business and will remain relatively small. Nobody is saying they are not good to have, just you seem to be comparing them to the core business and that's the bit I don't get.
I'm not doing anyone's bidding, and I have no idea what the beef is about. I really don't care either. Nobody has been rude to me and I wouldn't be bothered if they were. He suggests you got the numbers wrong, so I gave you the choice to correct them if you wanted to.
Jjoo, may i politely suggest if someone else ( who is a troll) says i got numbers wrong then you are doing their bidding, would it not be better if you really do care about figs that you go away DYOR and if any queries then gladly i'd respond.
I'll make it easy for you, PLT t/o i said circa £500m, you said by someone else's bidding this fig was from a few years back,
Latest link below from Boohoo investors Board
https://www.boohooplc.com/brands/prettylittlething
That's all you need to know, happy to converse with you but please do not do someone's dirty work, the guy's got issues.
@jjo please share that that number is for the 12 months ending Feb-20
As I said the group grew 40% since then (assume PLT did it's bit - £500m x 1.4 = £700m - tbh it's probs more as we all know PLT is the one firing on all cylinders in the USA) and then we have had quarterly updates which show growth still at the 40% rate so if that is a run-rate then (£700 x 1.4 = >£1billion)
It's worrying that someone can get figures for such a huge part of the group so wrong. Also nothing to add re the "missing" Debenhams billion?
Thanks for sharing. I for one have found your insight extremely useful and engaging
sorry the link - https://www.boohooplc.com/sites/boohoo-corp/files/all-documents/result-centre/2020/boohoo-com-plc-annual-report-2020-hyperlink.pdf
The "latest" from the boohoo board is that they no longer do revenue per brand
Fair enough rag. It wasn't my intention, I didn't realise the beef ran that deep. Thought you'd just annoyed each other or whatever.
I've discounted Debenhams completely in my investment thesis. If it surprises great. I just happen to agree with Dan that PLT and boo will continue to be the main drivers of growth going forward.
It's pleasing to hear these debs brands might potentially have more value than I gave them credit for.
Hey Jjoo no issues, it's my insight, i do work with these brands so i'm very hopeful as i see what's in the pipeline, which means of course i have an opinion but none of it means i'm right anyway who cares as long as share keeps heading in right direction!
Sorry all, I hadn't anticipated that my post would cause Armageddon (always think of the joke when I misspell it) but Ragtrade I must admit I have not seen better dodging, weaving or pivoting on a Sunday morning with someone being grilled by Marr. You should take to politics.
My initial thought for posting was that I had read it was stated that these brands were now the main money makers. I think with a bit of rationalisation I think what is now being said is that that isn't quite what was meant but that in fact these Debenhams brands will be the main money makers in 10 years (I'm inferring this from the 23 year old to 33 year old point but please allow if I've not got that quite right). On this point we can agree, the brands bought will grow but as at today or in any near future bigger than the current prime brands then that is no.
Also I must put my hand up and say you were correct to say my £1.5billion Debenhams figure was incorrect. I had taken this from a Boohoo statement but then it became clear that that figure was impacted from lockdowns so you're quite right to pick a period pre the pandemic. It is on the next part where we disagree again however and I must admit danl90 I thought your analysis quite enlightening but I will tweak your conclusions as they are perhaps bullish but again please allow me.
That the Debenhams brands can outgrow prime of course no one has a crystal ball but my point is that mathematically and based on Debenhams history, which is supplemented by store trading, it is impossible or a very vague guess. Here's my take
The analysis regarding PrettyLittleThing I will say that the £500m figure quoted by ragtrade is incorrect and I see where danl90 has pointed out that that figure is actually to the 12 months Feb-20. I then danl90 agree with your 40% uplift for FY21 (although I happen to think PrettyLittleThing is the star performer so this might be conservative but let's accept 40% growth as it is what is present). This does take it to £700m. I then agree regarding the first quarter statement update which again is around the 40% mark. Where I think you have been bullish to roll that into a run-rate. I would flex that to align with guidance, as that was unchanged by the board, but I then think this puts you at around £850m to £950million for the year ending FY22. This is just PrettyLittleThing. At the point PrettyLittleThing posted £500m, Boohoo had posted £600m so you can run similar growth onto Boohoo, although from what I see around something makes me think PrettyLittleThing is the star.
On to the Debenhams point and this is where I though the politician emerged. As I stated I agree I was incorrect to state £1.5billion (but again credit on some good number work danl90) the Debenhams figure is actually £1.9billion sales for UK (£3billion is accounting fluff to justify fees and some overseas - I've sat across from enough). Sorry I'm onto a second page...